Who Needs To File Form 1095-C?
The Affordable Care Act, also known as Obamacare, has made many changes that impact employers, the health insurance industry and individual taxpayers. One of these is the requirement for large employers to provide certain levels of health insurance coverage to full-time employees and their dependents. Another is the requirement for individual taxpayers to obtain health insurance coverage.
Form 1095-C is part of the set of IRS tools to ensure that both businesses and individuals are playing by the rules, and to penalize them if they are not. Unfortunately, some employers have dismissed this filing – mistakenly believing it doesn’t pertain to them.
Are You Sure You Don’t Have To File?
All “applicable large employers” (or businesses with 50 or more full-time employees or full-time equivalent employees) must file Form 1095-C. But don’t let this simple definition fool you. Some businesses may be considered applicable large employers and not even know it!
Before you dismiss the January deadline, take special note of the following points:
- The testing period for large employer status is the year before the current year (e.g. 2014 for 2015 large employer status). The 1095-C data is based on current year data (2015 in this example).
- A person who works at least 130 hours a month is considered a full-time employee for this purpose.
- Two part-time employees who work 15 hours a piece each a week will equal one full-time employee.
- There are common ownership and service group tests that might require joining multiple entities together in order to count employees. These apply to for-profits, not-for-profits and (potentially) governmental agencies!
The rules are tricky and there may be opportunities to help you avoid or manage your large employer status and therefore the 1095-C filing requirement. Failure to file the forms, however, will result in additional penalties, such as the pay or play penalty ($2,000 per employee) if you are not offering coverage to the right people. Even worse, if the IRS digs deeper and discovers that you’ve been offering an impermissible reimbursement plan, you may be faced with excise taxes that can be as high as $36,500 per employee annually.
Fortunately, the ACA experts at Rea & Associates can help you determine your large employer status and, if need be, help you with your 1095-C filing or other planning. Call Joe Popp at 419.923.6577 or email firstname.lastname@example.org to get started today.